It was never going to be a Budget for landlords and many in the industry will be disappointed that nothing was done to boost the flagging private rented sector where demand continues to be more than the supply of homes to rent.
The overwhelming message from the announcements, or perhaps lack of them, is that the Government still sees the UK as a nation of home owners and does not acknowledge that the rented sector is vital to the housing market.
There was good news for first time buyers in terms of a reduction in stamp duty for those opting for shared ownership and an extension of the Help to Buy scheme to 2023 but with conditions.
There is little doubt that the private rented believes that the Chancellor Philip Hammond failed to address the concerns of landlords in his Budget and the lack of positive change could drive more to sell up.
Those working in the sector have pointed out that many buy to let landlords have sold up due to a restrictive tax regime introduced in the last couple of years, including the extra 3% stamp duty on additional homes.
They are also warning that while the announcement that lettings relief will be cut and the Capital Gains Tax exemption period reduced to the final nine months of ownership, could adversely affect some landlords.
From April 2020, lettings relief will only apply in circumstances where the owner of the property is in shared occupancy with the tenant, in other words it will be abolished for non-resident landlords, selling properties they had previously lived in while the final period exemption is also set to be reduced, from the current 18 months to nine months.
Although cutting lettings relief might see more properties coming up for sale, the rental market will be the loser at the end of the day but the biggest blow is perhaps the lack of recognition that there is a direct relationship between financially squeezed landlords, many of whom struggle to invest in their properties, and tenants struggling to find homes that are fit for purpose.
Whilst the Chancellor again outlined the Government’s desire to boost home ownership, he failed to address the needs of the millions of people who cannot or do not want to buy. Those who do rent and do want to buy still struggle to save for a deposit at a time when rents are rising.
Indeed, the latest figures from Rightmove show that average asking rents outside of London have reached over £800 per month for the first time, fuelled by fewer available rental properties for prospective tenants to choose from.
Rents increased by 0.8% in the third quarter of 2018, the biggest jump recorded at this time of year since 2015 and at the same time there are 8.7% fewer rental properties available compared to this time last year and in London the number of available rental properties is down by 19.4%, with agents finding tenants four days quicker for landlords’ properties than a year ago.
Rightmove says that the continuing trend of fewer landlords purchasing buy to let properties has led to record high rents and a lack of available rental properties this quarter, increasing competition among many prospective tenants looking for the right home.
While the exit of landlords from the private rented sector is a combination of factors you cannot help but think that the Budget did not just do nothing, it just ignored landlords and that will have an impact down the line.
